How Will Molson Coors (TAP) Stock Respond to Tomorrow’s Earnings Release?

Molson Coors (TAP) will release its 2015 third quarter financial results on Thursday before the market open.
By Amanda Gomez ,

NEW YORK (TheStreet) -- Molson Coors Brewing Co. (TAP) - Get Report is scheduled to announce its financial results for the third quarter of 2015 before the market open on Thursday.

The Coors Light and Blue Moon brewer is expected to report a year-over-year decline in earnings and revenue.

Analysts have estimated earnings of $1.28 per share on $1.02 billion in revenue for the latest quarter.

Last year, Molson Coors posted earnings of $1.46 per share on revenue of $1.17 billion for the 2014 third quarter.

The company could be close to acquiring the remaining 58% stake of MillerCoors it does not already own from SABMiller (SBMRY) for between $10 billion and $13.5 billion, according to the Financial Times.

Anheuser Busch InBev (BUD) is seeking a plan to divest the stake before it issues a formal offer to acquire SABMiller.

Molson Coors stock is down 0.63% to $87.37 in late morning trading on Wednesday.

Separately, TheStreet Ratings team rates MOLSON COORS BREWING CO as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

We rate MOLSON COORS BREWING CO (TAP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its expanding profit margins, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 49.05% is the gross profit margin for MOLSON COORS BREWING CO which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.77% significantly outperformed against the industry average.
  • The current debt-to-equity ratio, 0.41, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.47 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • MOLSON COORS BREWING CO's earnings per share declined by 21.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, MOLSON COORS BREWING CO reported lower earnings of $2.75 versus $3.06 in the prior year. This year, the market expects an improvement in earnings ($3.78 versus $2.75).
  • TAP, with its decline in revenue, slightly underperformed the industry average of 11.4%. Since the same quarter one year prior, revenues fell by 15.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: TAP

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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